New market study, "Argentina Petrochemicals Report 2011", has been published

Nov. 9, 2010 - PRLog -- A lack of feedstock access is plaguing the Argentine petrochemicals industry with the prioritisation of residential winter fuel demands leading to severe restrictions in gas allocations to downstream industries and plant shutdowns and undermining hopes of product diversification and expansion, according to BMI's latest Argentina Petrochemicals Report.

The government has been restricting gas deliveries to factories and power plants so homes get sufficient supplies, as deficit is at 25mn cu m/d, or 20% of average demand. In the winter of 2010, there were cuts of around 30% of supply of normal gas use by industrial clients, including petrochemicals industries, despite ordering more LNG cargoes as a stopgap measure. In a further move to secure gas supply, Argentina is currently exporting about 40% less to Uruguay and Chile than it did in 2009.

In July 2010, producers in the petrochemicals sector, such as TGS, The Dow Chemical Company, PBB Polisur, Solvay Indupa and Profertil,were operating plants at 30-40% capacity on inadequate natural gas supplies, as the country was gripped by a severe cold spell. The cold weather drove up residential gas demand by 60-67mn cu m/d. A lack of ethane supply from Compania Mega led to a reduction in feedstock for Dow Chemical's 700,000tpa ethylene plants and 600,000tpa HDPE, LDPE and LLDPE facilities in Bahia Blanca. Dow was forced to idle its ethylene facilities and import ethylene for PE production. Mega, a venture of Dow Chemical (28%), Spain's Repsol (38%) and Brazil's state-owned Petrobras (34%), gets gas supplies from Repsol YPF's Loma La Lata field in Neuquen. The company has the capacity to produce 540,000 tpa of ethane, 365,000 tpa of propane, 235,000tpa of butane and 220,000tpa of natural gasoline at Bahia Blanca.

Argentina's petrochemicals market experienced a strong upturn of at least 25% in 2010 with main consumers experiencing strong growth. However, GDP growth is set to decline from over 4.0% in 2010 to just 1.8% in 2011, dragging down the recovery in the market. We caution that the consumer-led growth in plastics consumption is very short term and is likely to decline to much-reduced levels when tax breaks and subsidies are removed.

With the domestic market headed for slowdown in 2011, petrochemicals output is going to be more reliant on exports and therefore sensitive to exchange rate fluctuations. Over the longer term, we continue to see steady depreciation, owing to the current economic model of export promotion and fiscal expansion. The Argentine peso is set to decline from an estimated average of ARS3.90/US$ in 2010 to ARS4.50/US$ in 2011. However, signs that the government may shift away from this model could lead us to adopt a more bullish long-term stance. Argentine PP producers Petroquimica Cuyo and Petroken have proved to be more competitive on the domestic market; although Brazilian PP has duty-free entry its prices are higher than Argentine prices, while imports from the US and Asia have a 15% import tariff which prices them out of the market. Slovay Indupa's PVC facilities will be less affected by the domestic slowdown in 2011 as PVC exports will benefit from growth in Brazil and the growth in the country's construction sector.

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Report Table of Contents:

Executive Summary
SWOT Analysis
- Argentina Petrochemical Industry SWOT
- Argentina Political SWOT
- Argentina Economic SWOT
- Argentina Business Environment SWOT
Global Petrochemicals Overview
- Petrochemicals Market Overview
- Table: World Ethylene Production By Country, 2009 And 2014 ('000 tonnes capacity)
- Financial Results
- Table: Financial Results Of Major Petrochemicals Companies, 2009
- Global Oil Products Price Outlook
- Table: Oil Product Price Assumptions, Q409-Q410 (US$/bbl)
- Table: Oil Product Price Data And Forecasts, 2007-2014 (US$/bbl)
Latin America Overview
Argentina Market Overview
- Table: Argentina's Olefins Facilities, 2009
- Table: Argentina's Polyolefins Facilities, 2009
- Table: Argentina's Aromatics Facilities, 2009
- Table: Argentina's Fertiliser Facilities, 2009
- Market Structure
- Table: Argentina Petrochemicals Sector - Cracker Capacity Data ('000 tonnes)
- Regulatory Structure
Industry Trends And Developments
- Upstream Investment
- Downstream Developments
Petrochemicals Business Environment
- Table: Americas Petrochemicals Business Environment Ratings
- Limits To Potential Returns
- Risks To Realisation Of Returns
- Industry Forecast Scenario
- Table: Argentina's Petrochemicals Sector, 2007-2015 ('000 tpa, unless otherwise stated)
- Macroeconomic Outlook
- Table: Argentina - Economic Activity
Company Monitor
- The Dow Chemical Company
- Petrobras Energia Participaciones (PEPSA)
- Repsol YPF
- Solvay Indupa
Country Snapshot: Argentina Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education
- Table: Life Expectancy, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Manufacturing Wages, 1995-2001
BMI Methodology
- How We Generate Our Industry Forecasts
- Chemicals And Petrochemicals Industry
- Cross Checks
- Business Environment Ratings
- Table: Petrochemicals Business Environment Indicators And Rationale
- Weighting

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